Buy Assam Company: Ashish Tater

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Buy Assam Company: Ashish Tater

Buy Assam Company, says Ashish Tater, Head of Research, Fort Share Broking.

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Excerpts from Bazaar on CNBC-TV18 Watch the full show » ALSO READ See previous views by Ashish Tater See what other Experts & Brokerages are saying about Assam Company See messages about Assam Company Assam Company BSE | NSE 30/05/12 Are Mutual Funds betting on Assam Company?

Buy Assam Company , says Ashish Tater, Head of Research, Fort Share Broking.

Tater told CNBC-TV18, "Assam Company is one space which has been doing rounds about from 2007 onwards because of its rich oil and gas available in the Assam region and Nagaland region but what is interesting for us is the inclusion of the top management with Pradip Tusnial. We feel that this particular personal has turnaround the tea estate story for Khaitans and we feel that there could be a good restructuring prospect into this particular stock itself. We feel that this company is having a asset of close to Rs 1,800 crore on NAV basis that too when I discount this on return of equity of close to 26% which is very high because this company is having a small sale that owns 18 tea plantation across India and also own four oil and gas base."

He further added, "What is interesting is the GSPC tie-up for a 750-1000 mw SEZ project that the company has recently got nod for. If I see the peer valuation of SEZ project, we feel this stock is terribly undervalued but what is interesting is how the company is going to fund this particular project because the company is already sitting on a debt of Rs 513 crore and that's why we feel that this stock can be a good buy because we feel at 22-21 the downside is 8-10% but there could be a potential upside up to 100% from two years perspective."

"If I see the entire oil and gas reserves they have a proven record in the Arakan and Amguri based in Assam which is close to 60 million barrels of oil and close to 290 cubic feet billion cubic feet (Bcf) of gas along with that the company is into the exploratory area right now for the AAON-7, we feel there could be a major restructuring exercise into the stock and the net asset value at a very high return on equity, discounts at Rs 40 from two years perspective. We have pegged the Diwali target given this was our Diwali pick at a very conservative target of Rs 30 by next Diwali which is still an upside of 40-45% from current levels and given the recent inclusion of one of a person who has got restructuring done and as a prove track record for the management, we feel this could be a clear multibagger if someone holds it for two-three years perspective for a decent 25% upside year on year returns on to the stock."

Disclosure: I am not suppose to own the stock recommended here but this has been Diwali picks from Fort to all our clients and thus we feel this stock I have vested interest for our side maybe this stock have also been bought into the  portfolio of the firm, so we might have also vested interest in that sense.